An introduction to Exchange Traded Funds

An Exchange Traded Fund (ETF) is similar to a managed fund, except that it takes
the form of shares that can be traded openly on a share market - whereas a
managed fund can usually only be purchased and redeemed directly through the
services of a fund manager.

Many common ETFs have been established to track well-known market indices and
therefore do not rely on a fund manager's expertise in actively selecting
shares.

Creation of an ETF

To create an ETF, the ETF Manager will buy parcels of shares from many different
companies within a group, making a pool.

This pool of new shares is then collectively listed on the share market under its own ticker code.

Features of an ETF

An ETF is likely to mirror the movements of the market or index that it tracks

The ETF fund selection process is mechanical, as opposed to a manual selection
process

You can enter/exit the market, at your own discretion, via your share broker

There are typically lower annual fees than a managed fund, due to a "passive"
fund management style

It provides an opportunity to invest in multiple companies

Find an ETF

ETFs are available through Direct Broking for an increasing range of equity and
other asset classes.

Disclaimer
Investment products involve risks, including the potential loss of some or all
of the principal amount invested. The information displayed on this page does
not constitute a recommendation, opinion or guidance on the part of Direct Broking
on the suitability of any investment products to your investment
objectives. Any investment decision made by you will be based solely on your
own evaluation of your financial circumstances and investment objectives. If
you are uncertain about any aspect of an investment or the implications for
you, Direct Broking recommends that you seek expert advice from a financial
adviser.